Organization, Basis of Presentation and Liquidity

12 Months Ended

Dec. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Basis of Presentation and Liquidity

1. Organization, Basis of Presentation and Liquidity

General – BioTime, Inc. (“BioTime” or the “Company”) is a clinical-stage biotechnology company targeting degenerative diseases. BioTime’s programs are based on two proprietary core technology platforms: cell replacement and cell/drug delivery. With the cell replacement platform, BioTime is creating new cells and tissues with its pluripotent and progenitor cell technologies. These cells and tissues are developed to replace those that are either rendered dysfunctional or lost due to degenerative diseases. BioTime’s cell/drug delivery programs are based upon its proprietary HyStem^® cell and drug delivery matrix technology. HyStem^® was designed to provide for the transfer, retention, engraftment and metabolic support of cellular replacement therapy.

BioTime’s lead cell replacement clinical product is OpRegen^®, a retinal pigmented epithelium (RPE) cell replacement therapy, which is in a Phase I/IIa multicenter trial for the treatment of late-stage, dry age-related macular degeneration (dry-AMD). There are currently no FDA-approved therapies for dry-AMD, which accounts for approximately 90% of all age-related macular degeneration cases, and is the leading cause of blindness in people over the age of 60.

BioTime’s lead cell delivery clinical product is Renevia^®, a potential treatment for facial lipoatrophy. “Lipoatrophy” means the loss of fat tissue which can be caused by several factors, including trauma, aging or drug side effects such as those that cause HIV-associated lipoatrophy. BioTime is also developing HyStem^® for the delivery of therapeutic drugs and cells to localized areas of the body, including for sustained drug release in the targeted area.

In 2017, BioTime formed AgeX Therapeutics, Inc. (“AgeX”) to continue development of early-stage programs focusing on the development of technology relating to cell immortality and regenerative biology, to aging and age-related diseases. AgeX will focus on the development of regenerative medicine technologies targeting the diseases of aging and metabolic disorders. AgeX’s initial programs focus on utilizing brown adipose tissue (“brown fat”) in targeting diabetes, obesity, and heart disease; and induced tissue regeneration (“iTR”) in utilizing the human body’s own abilities to scarlessly regenerate tissues damaged from age or trauma. AgeX may also pursue other early-stage programs.

On August 17, 2017, AgeX completed an asset acquisition and stock sale pursuant to which it received certain assets from BioTime for use in its research and development programs and raised $10.0 million in cash from investors to finance its operations. This capitalization of AgeX has allowed BioTime to focus its resources on its clinical programs in its core therapeutic sectors. As of December 31, 2017, BioTime owned approximately 85% of the issued and outstanding shares of AgeX common stock (see Notes 2 and 10).

BioTime is also enabling early-stage programs in other new technologies through its own research programs as well as through other subsidiaries or affiliates.

BioTime also has significant equity holdings in two publicly traded companies, Asterias Biotherapeutics, Inc. (“Asterias”) and OncoCyte Corporation (“OncoCyte”), which BioTime founded and, until recently, were majority-owned and consolidated subsidiaries. Asterias (NYSE American: AST) is presently focused on advancing three clinical-stage programs that have the potential to address areas of high, unmet medical need in the fields of neurology (spinal cord injury) and oncology (acute myeloid leukemia and lung cancer). OncoCyte (NYSE American: OCX) is developing confirmatory diagnostic tests for lung cancer, breast cancer, and bladder cancer utilizing novel liquid biopsy technology.

On February 17, 2017, BioTime’s ownership of OncoCyte declined below 50% after certain OncoCyte investors acquired OncoCyte common stock by exercising OncoCyte stock purchase warrants, and BioTime deconsolidated the financial statements of OncoCyte from its consolidated financial statements (the “OncoCyte Deconsolidation”) (see Note 3). Since February 17, 2017, BioTime has accounted for OncoCyte using the equity method of accounting at fair value (see Note 4).

On May 13, 2016, BioTime BioTime’s percentage ownership in Asterias declined below 50% as a result of Asterias’ public offering of its common stock to raise capital for its operations and BioTime deconsolidated the financial statements of Asterias from its consolidated financial statements (the “Asterias Deconsolidation”) (see Note 3). Since May 13, 2016, BioTime has accounted for the Asterias common stock it holds using the equity method of accounting at fair value (see Note 5).

Use of estimates - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period with consideration given to materiality. Significant estimates and assumptions which are subject to significant judgment include those related to going concern assessment of consolidated financial statements, useful lives associated with long-lived assets, including evaluation of asset impairment, allowances for uncollectible accounts receivables, loss contingencies, deferred income taxes and tax reserves, including valuation allowances related to deferred income taxes, and assumptions used to value stock-based awards, debt or other equity instruments. Actual results could differ materially from those estimates.

Principles of consolidation – BioTime’s consolidated financial statements include the accounts of its subsidiaries. The following table reflects BioTime’s ownership, directly or through one or more subsidiaries, of the outstanding shares of its operating subsidiaries as of December 31, 2017.

Subsidiary	Field of Business	BioTime Ownership		Country
Cell Cure Neurosciences Ltd. (“Cell Cure”)	Products to treat age-related macular degeneration		98.8%(1)	Israel
ES Cell International Pte. Ltd. (“ESI”)	Stem cell products for research, including clinical grade cell lines produced under cGMP		100%	Singapore
OrthoCyte Corporation (“OrthoCyte”)	Developing bone grafting products for orthopedic diseases and injuries		99.8%	USA
AgeX Therapeutics, Inc. (“AgeX”)	PureStem® progenitor cell lines, brown adipose fat, induced tissue regeneration technology, and pre-clinical cardiovascular therapy research and development		85.4%	USA
ReCyte Therapeutics, Inc. (“ReCyte Therapeutics”) (2)	Research and development involved in stem cell-derived endothelial and cardiovascular related progenitor cells for the treatment of vascular disorders, ischemic conditions and brown adipocytes for type-2 diabetes and obesity		94.8%	USA
LifeMap Sciences, Inc. (“LifeMap Sciences”) (2), (3)	Biomedical, gene, disease, and stem cell databases and tools		81.7%	USA

(1)	Includes shares owned by BioTime and ESI
(2)	ReCyte Therapeutics and LifeMap Sciences are subsidiaries of AgeX
(3)	LifeMap Sciences, Ltd. (Israel) is a wholly-owned subsidiary of LifeMap Sciences

All material intercompany accounts and transactions have been eliminated in consolidation. As of December 31, 2017, BioTime consolidated its direct and indirect wholly-owned or majority-owned subsidiaries because BioTime has the ability to control their operating and financial decisions and policies through its ownership, and the noncontrolling interest is reflected as a separate element of shareholders’ equity on BioTime’s consolidated balance sheets.

Liquidity – Since inception, BioTime has incurred significant operating losses and has funded its operations primarily through the issuance of equity securities, payments from research grants, royalties from product sales and sales of research products and services. At December 31, 2017, BioTime had an accumulated deficit of approximately $216.3 million, working capital of $35.7 million and shareholders’ equity of $164.3 million. BioTime has evaluated its projected cash flows and believes that its cash, cash equivalents and available-for-sale securities of $38.2 million as of December 31, 2017, provide sufficient cash, cash equivalents, and liquidity to carry out BioTime’s current operations through at least twelve months from the issuance date of the consolidated financial statements included herein. BioTime also holds shares of Asterias and OncoCyte common stock with a combined value of $117.2 million at December 31, 2017. Although BioTime has no present plans to liquidate its holdings of Asterias or OncoCyte shares, if BioTime needs near term working capital or liquidity to supplement its cash and cash equivalents for its operations, BioTime may sell some, or all, of its Asterias or OncoCyte shares, as necessary.

BioTime’s projected cash flows are subject to various risks and uncertainties, and the unavailability or inadequacy of financing to meet future capital needs could force it to modify, curtail, delay, or suspend some or all aspects of its planned operations. BioTime’s determination as to when it will seek new financing and the amount of financing that it will need will be based on its evaluation of the progress it makes in its research and development programs, any changes to the scope and focus of those programs, and projection of future costs, revenues, and rates of expenditure. For example, clinical trials being conducted for its OpRegen^® program will be funded in part with funds from grants and not from cash on hand. If BioTime were to lose grant funding or is unable to continue to provide working capital to the OpRegen^® program, it may be required to delay, postpone, or cancel the clinical trials or limit the number of clinical trial sites, unless BioTime is able to obtain adequate financing from another source that could be used for the clinical trials. BioTime cannot assure that adequate financing will be available on favorable terms, if at all. Sales of additional equity securities by BioTime or its subsidiaries could result in the dilution of the interests of present shareholders.

As further discussed in Note 10, on August 17, 2017, AgeX completed an asset acquisition and stock sale pursuant to which it received certain assets from BioTime for use in its research and development programs and raised $10.0 million in cash from investors to finance its operations. However, BioTime cannot assure that adequate financing will be available to AgeX in the future to fund the AgeX programs.